Market Update: 9 Jul 2020

What’s going on with BTC?

With Alt-season heating up and the Defi train rolling on — BTC has only managed to test the patience of traders further, crushing spot volatility and trading volumes while at it. BTC 10-day realized volatility has now reached its lowest level in 2 years (Chart 1) at just 20% (down from an incredible 321% in March), a low that’s only preceded in Sep & Oct 2018. We all remember what followed in Nov 2018 — when BTC fell 45% in a week following the break of the support line then. With the divergence in 1m implied volatility this past week vs. realized volatility (on the back of more call buying), a similar bang to end the lull is what option traders are betting on (this time with an upside break).

Chart 1

Furthermore to add to the head-scratching BTC inertia, in terms of macro fundamentals this week we had:
1. Gold fresh 10-year highs
2. Nasdaq all-time highs
3. Chinese A Shares all-time highs (after the incredible 20% rally this past week)

Why BTC isn’t following any of these is a conundrum. Is it just a matter of timing? Or is this weakness a harbinger of downside to come.

On the technical front not much has changed at all — near-term we’re still being held down by the triangle trendline on the topside, and the larger 10.5k resistance level, but while we remain above 8.8k the uptrend is still considered intact (Chart 2). Until either side breaks — we could be in for a extended period of summer lull.

Chart 2

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